In my recent blog post about the FTC's proposed ban of non-compete clauses, I pointed out that with the guidance of skilled lawyers, well-intentioned companies should still be able to protect their interests without non-competes. Since then, several parties – including former U.S. Secretary of Labor Eugene Scalia – have suggested that the FTC lacks the authority to adopt the proposed rule.
So what if the critics are correct? Regardless of whether the proposed rule goes into effect – or even if it goes into effect only to later be found invalid by the courts – I predict that the mere proposition of the rule will drive changes in the practice of law surrounding non-competes. These changes to the federal legal landscape are concurrent with actions at the state legislative level, as states attempt to address non-compete concerns in various ways, such as Virginia's recent decision to outlaw non-competes for low-wage workers.
Sans state legislative initiatives or federal agency rulemaking, the enforceability of a particular non-compete has historically been determined in the courts on an individual basis. Companies file lawsuits to bar former employees from working for a competitor. Former employees file lawsuits for assurance that they may lawfully work for a competitor. Courts then scrutinize the non-compete agreement in question and rule on its viability, applying a legal standard that calls for balancing competing interests – including societal interests. With each case, the...
President Donald Trump, Vice President JD Vance, and other Republican officials came together for a 2-day convention this week to rally voters in advance of the midterm elections in November. But ...